Vendors adjust to healthy foods movement

Filed under Governance & Legal, News

T Hephner, founder of Healthy U Snacks, stocks only better-for-you snacks in the company's vending machines

T Hephner, founder of Healthy U Snacks, sells healthy snacks to schools; photo courtesy of Healthy U Snacks

By Hallie Busta

Move over, junk food. Chicago-area vending machine companies are swapping calorie-dense snacks for healthier items in the wake of new legislation designed to improve food options for children.

Until recently, vending machines were associated with snacks laden with sugar and fat, said Jackie Clark, spokeswoman for the National Automatic Merchandising Association. But as awareness of obesity and health issues linked to poor nutrition has grown, some vending machine operators are adjusting their fare.

More vendors are expected to follow suit due to the passage of the the Healthy, Hunger-Free Kids Act, which President Barack Obama signed into law in December. The act aims to swap the junk food in school vending machines for healthier items.

While Mark Vend Co. in Northbrook continues to offer traditional snacks and candies, the company strives to ensure one-quarter of its offerings are better-for-you products, said Daniel Stein, co-owner.  Demand for healthier items is increasing daily, Stein said, yet many consumers aren’t willing to change their diets entirely.  Offering smaller portion sizes of traditional snacks along with healthier options is a better approach than selling only healthy products, he said.

But McHenry-based Healthy U Snacks offers only healthier options, said founder and president T Hephner, who launched the company in 2009. Currently, half the company’s revenue comes from middle schools and high schools, he said.

More schools are expected to add healthier items due to the Healthy, Hunger-Free Kids Act, which stems in part from first lady Michelle Obama’s campaign to reduce childhood obesity rates, the Washington Post reported.

Obesity rates among those ages 6 to 11 increased to 19 percent in 2004 from 4 percent in 1963 and tripled to 17 percent for adolescents ages 12 to 19 during the same period, according to an Institute of Medicine paper cited in a U.S. Senate report. The report also said that rates among youth ages 2 to 5 nearly tripled to 14 percent in 2004 from 1971. More recent data from the U.S. Centers for Disease Control and Prevention indicates nearly 17 percent of youth ages 2 to 19 were classified as obese in the 2007-2008 period.

The child nutrition bill targets vending machines, which are common in schools. The Government Accountability Office counts vending machines in 99 percent of high schools, 97 percent of middle schools and 83 percent of elementary schools, according to the Senate report.

Meantime, a measure in the Patient Protection and Affordable Care Act requires vending operators with 20 or more machines to provide calorie information on certain products. The U.S. Food and Drug Administration is expected to release specific requirements of the program by the end of March.

Currently, Mark Vend is testing a touch-screen that displays nutritional information on 50 of its 1,800 machines. “We are trying to get ahead of the curve,” Stein said.

The new disclosure rules will allow consumers to make informed decisions about what foods fit into their diets, the U.S. Food and Drug Administration stated in a report.  But vending industry representatives say the cost of complying with new rules will be a burden.

Vending operators will spend about 14 million hours annually complying with the new regulations, the Food and Drug Administration said in a November statement.  However, food manufacturers are likely to offer calorie-label stickers for products sold in vending machines, the FDA said.

Still, the time and money involved in adding signage and maintaining records could impact vending machine operators’ ability to expand, said Ned Monroe, senior vice president of governmental affairs at the National Automatic Merchandising Association.

Even without labeling requirement considerations, vending machine operators who shift to healthier items might see sales fall initially, said Anthony Porfirio, sales and customer representative at Chicago-based Avcoa Vending, which has added more healthy options in the last few years.

With overhead costs high and profit margins low in the industry, vending operators need volume to be successful, Hephner said.  He sells foods made without high fructose corn syrup, artificial flavorings and trans fats, setting him apart from many other operators.

Still, adjusting the merchandise mix doesn’t guarantee long-term success, said Elliot Maras, editor at Automatic Merchandiser magazine.  During a tough economy, cost-conscious consumers might choose not to spend more on healthier items, according to Automatic Merchandiser’s 2010 vending industry report.

While “nutrition snacks,” including granola bars, rice cakes and trail mix, gained some market share in 2009, operators surveyed said they weren’t competitive with traditional offerings in terms of price and selection.   

Ultimately, consumers vote with their money. Customers may ask for healthier options,  Maras said, “but if those options don’t perform well, the operator doesn’t continue to offer them.”

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